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Money Laundering & AML Compliance Flashcards

7 cards from real CFS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Money Laundering & AML Compliance flashcards as text

  1. Under the Bank Secrecy Act, what is the threshold amount that triggers a Currency Transaction Report (CTR) filing requirement?

    Answer: $10,000

    Financial institutions must file a CTR for any cash transaction exceeding $10,000 in a single business day.

  2. A bank customer deposits $9,500 on Monday and $9,500 on Tuesday to avoid CTR reporting. This behavior is known as:

    Answer: Structuring (smurfing)

    Structuring, also called smurfing, involves breaking up large cash transactions into smaller amounts to evade reporting thresholds.

  3. Which AML program element requires financial institutions to identify and verify the identity of customers opening new accounts?

    Answer: Customer Due Diligence (CDD)

    Customer Due Diligence requires institutions to collect and verify identifying information about customers to assess money laundering risk.

  4. The 'beneficial owner' rule under FinCEN's CDD regulations requires identifying individuals who own what minimum percentage of a legal entity customer?

    Answer: 25%

    FinCEN requires financial institutions to identify and verify any individual who owns 25% or more of a legal entity customer.

  5. When a financial institution files a Suspicious Activity Report (SAR), which of the following is true?

    Answer: The institution is prohibited from disclosing the SAR to the subject

    Federal law prohibits financial institutions from disclosing that a SAR has been filed or the contents of a SAR to the subject of the report.

  6. Which money laundering stage involves converting illicit cash into financial instruments or other assets to obscure its criminal origin?

    Answer: Placement

    Placement is the first stage where illegal cash enters the financial system, often through deposits, currency exchanges, or purchasing monetary instruments.

  7. A real estate agent notices a buyer insisting on paying for a $2 million property entirely in cash and refuses to provide the source of funds. Under AML frameworks, this is best described as:

    Answer: A red flag requiring enhanced due diligence

    Insistence on all-cash payment with refusal to disclose funding sources is a recognized AML red flag requiring enhanced scrutiny.